Government Programs
Community Development Block Grant (CDBG): How It Works
Grant Writing Service Editorial Team
June 12, 2026 · 5 min read
Table of contents
Key takeaways
- Congress funded the CDBG formula program at $3.3 billion for fiscal year 2026, despite a proposal to eliminate it; the fiscal year 2027 budget request again proposes elimination.
- Nonprofits and developers do not apply to HUD. They apply to the city, county, or state that receives the money.
- At least 70 percent of a grantee's spending must benefit low- and moderate-income people, public services are capped at 15 percent, and planning and administration at 20 percent.
The Community Development Block Grant (CDBG) is a U.S. Department of Housing and Urban Development (HUD) program that sends flexible federal money, by formula, to larger cities, urban counties, and states, which then decide locally how to spend it on housing, public infrastructure, community facilities, public services, and economic development that mainly benefit low- and moderate-income residents. Nonprofits, housing developers, and businesses never apply to HUD for it. They apply to the local or state government that receives the allocation, usually in a once-a-year funding round.
Is CDBG still funded?
Yes, as of October 2026. The President's fiscal year 2026 budget proposed eliminating CDBG, but Congress kept it: the Consolidated Appropriations Act, 2026 (Public Law 119-75), enacted in February 2026, funded the formula program at $3.3 billion, level with fiscal year 2025. The same law also routed separate money through the CDBG account for congressionally directed community projects.
The fiscal year 2027 budget request, released in April 2026, again proposes eliminating the program. Congress has rejected that proposal every previous time, and the House's fiscal year 2027 HUD funding bill carries $3.3 billion for CDBG. Final fiscal year 2027 appropriations had not been enacted as of mid-October 2026; the government is operating under a short-term continuing resolution that runs through December 11, 2026. If your project depends on a 2027 award, ask your local community development office how it is budgeting for that uncertainty.
How the money reaches your community
HUD splits each year's appropriation by a statutory formula that weighs poverty, population, overcrowded housing, age of housing, and slow population growth.
| Path | Who receives it | Share of formula funds | How you access it |
|---|---|---|---|
| Entitlement program | Principal cities of metropolitan areas, other metropolitan cities of 50,000 or more, and urban counties of 200,000 or more | 70 percent | Apply to the city or county's annual round |
| State program | States, for non-entitlement towns and rural counties | 30 percent | The town or county applies to the state; nonprofits partner with the local government |
Two related programs show up in nearly every search for CDBG: CDBG Disaster Recovery, a special appropriation for presidentially declared disasters with its own rules, and CDBG-CV, the one-time CARES Act pandemic funding. Both run through the same governments but are separate pots of money.
What CDBG can and cannot pay for
Every funded activity must meet one of three national objectives: benefit low- and moderate-income persons, prevent or eliminate slums or blight, or meet an urgent need that threatens health or safety. Low- and moderate-income generally means household income at or below HUD's Section 8 low-income limit, which is 80 percent of area median income.
Three spending rules in 24 CFR Part 570 shape what a grantee can fund:
- 70 percent overall benefit. At least 70 percent of a grantee's CDBG spending, measured over a period of up to three years, must go to activities that benefit low- and moderate-income people.
- 15 percent public services cap. No more than 15 percent of each grant can pay for public services such as job training, child care, senior services, or food programs. This is the cap most nonprofits run into, because it keeps service grants small and competitive.
- 20 percent planning and administration cap. No more than 20 percent of a year's grant can go to planning and program administration.
Commonly funded: owner-occupied housing rehabilitation, water and sewer lines, streets and sidewalks, parks and community centers in eligible neighborhoods, accessibility improvements, homeownership assistance, microenterprise support, and acquisition or clearance of property.
Generally ineligible: buildings used for the general conduct of government (city halls, for example), routine government operating expenses, political activities, new permanent housing construction except in narrow cases, recurring income payments to households (emergency payments of up to three consecutive months paid to a provider are an exception), and equipment purchases except in specific cases such as fire protection equipment.
How a nonprofit or developer actually gets CDBG money
- Find out which program covers you. Call your city or county community development, housing, or planning department and ask whether it is an entitlement grantee or covered by the state program.
- Read the Consolidated Plan and the current Annual Action Plan. Every grantee adopts a Consolidated Plan, covering three to five years, that ranks local needs, and an Annual Action Plan listing the year's projects. These plans are public, usually on the city or county website. A project that matches a listed priority competes; one that does not rarely gets funded.
- Attend the public hearings. Grantees must hold public hearings and accept comment before adopting their plans. Speaking at one is how a new project gets on the radar a year before the money is awarded.
- Confirm your national objective and the data behind it. For a service, you will document client income. For a facility, you will show that the area served is predominantly low- and moderate-income using HUD's census-based data.
- Apply in the local round. Use the jurisdiction's application, budget form, and deadline. Each grantee sets its own calendar, and applications typically close months before the program year begins, so ask early.
- Prepare for subrecipient compliance. A funded nonprofit signs a subrecipient agreement and inherits federal requirements, including the Uniform Guidance cost principles explained in our plain-language guide to 2 CFR 200, environmental review before any work starts, income documentation, and regular reporting to the city.
Because the rules are federal but the decision is local, the review panel is often a mix of city staff and a citizen advisory committee. They want to see a documented local need, a clear national objective, a realistic budget, and an organization that can handle federal paperwork. Our guides to building a documented statement of need and preparing a grant budget cover the two sections that most often decide these rounds.
A warning about CDBG "grant" offers to individuals
HUD does not give CDBG grants to individuals, and no one can charge you a fee to "unlock" one. Unsolicited calls, texts, or social media messages offering a personal government grant are a common scam. Individuals benefit from CDBG only indirectly, for example through a city's home repair program or a down payment assistance program, and those are applied for through the city or its partner agency, never through a stranger.
Related HUD and federal programs
CDBG is often combined with other sources on the same project. The HOME Investment Partnerships Program funds affordable housing construction and rehabilitation more deeply than CDBG can. The Emergency Solutions Grants program funds shelter and homelessness services. For anti-poverty services delivered through Community Action Agencies rather than local governments, see our explainer on the Community Services Block Grant. If a project needs a direct federal award instead of a pass-through, our walkthrough of applying for federal grants explains the Grants.gov route.
When you have a project that fits your jurisdiction's priorities, our federal grant writing team can prepare the local CDBG application.
